Suggestions for a merchant account and payment gateway for a UK startup using recurring payments?


We are a new company and have developed an online service that we want to charge a monthly fee to use. So far, we have tried two merchant account providers and have been turned down because we are a new company with no trading history, and we want to use recurring payments.

It seems recurring payments is the real stumbling block because there is a high risk of chargebacks.

On top of the recurring payments the merchant account should work with a payment gateway that allows our website to host the credit card form on our page for example in an iframe or posting the cc details directly to the payment gateway, therefore reducing our PCI requirements.

Anyone else in a similar situation and managed to get a payment gateway and merchant account in the UK?

FYI we are currently applying to SagePay.

UK Merchant Account Payment Gateway

asked Feb 2 '12 at 19:10
Woo Hoo
193 points

2 Answers


You have definitely identified the problem - it is the recurring payments. Because you are a start-up you have no trading history to refer to and so it is going to be very difficult to get a merchant account, and when you do you are likely to find that you will be penalized with high rates or retained balance or other conditions.

If you can find an alternative to recurring payments that would be your simplest solution. Could you invoice each month, or charge an annual administration charge with free access to your product? Remember you would not have to do this indefinitely, just until you have built a trading history and this is acceptable your service provider.

I work for Nochex and that is where I derive my experience / answer from.

Hope this helps, Peter

answered Feb 4 '12 at 02:06
11 points
  • Im afraid if we dont use recurring payments then our competion will have a big advantage over us and we would make a loss. We can't expect our customers to enter the cc details each month. Thanks for your answer though. – Woo Hoo 11 years ago
  • Nochexman, could you explain further the bit about building a trading hisotry that is acceptable to the service provider? Would it help if we invested say x amount in the business so the company had an inflated opening balance? – Woo Hoo 11 years ago
  • If you are a start-up you need to think creatively; eg you could offer your 1st 100 customers life-time membership for £x amount. This would generate income & enable you to start building a trading history. As you get established and get the means to accept recurring payments you can change your subscription arrangements. – Nochexman 11 years ago
  • The point about trading history is it allows you to demonstrate how responsibly you operate your business: if there are no big issues with things like refunds and charge-backs you will find it easier to get more sophisticated solutions like recurring payments. Maintaining a balance is a good idea because it demonstrates your commitment, but it does not demonstrate how responsible you are, if that makes sense. Typically account providers like to see 3-6 months trading history. Hence opening an account and trading responsibly helps your business develop. Good luck and hope this helps! Pete – Nochexman 11 years ago


We managed to obtain a merchant account from FirstData that allows us to use recurring payments. We are using Realex as our payment gateway and they also store the credit card details and allow recurring payments via sending of tokens each month.

We had to provide extensive information including our business plan and had to challenge a rejection based on a misunderstanding. So even if they reject you find out why and argue. It also helps that Chris from FirstData was a real help and kept going back to the underwriters.

I hope this helps someone else in a similar situation to us.

answered Feb 16 '12 at 21:30
Woo Hoo
193 points

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